Friday, March 20, 2015

Big Pharma's perversion: patents

The DailyBeast has a very interesting article about the numerous problems with our pharmaceutical industry. TV advertising, clinical trial fraud, tit-for-tat payments to doctors for prescribing drugs, a Good ol' Boy club of physicians and a government complicit in helping the whole thing along. What we have now is a nation where 70% of the population is taking prescription drugs.

While the article is very interesting, what is more interesting is what is missing. Patents.

Patents give rise to this mess. The royalties are so lucrative that Big Pharma is willing to go to any length, good health be damned, to sell their drugs to anyone and everyone, even if they don't really need them. How do we know this? We know because the FDA has come down on Big Pharma numerous times for encouraging doctors to prescribe drugs for uses not originally intended. Whatever it takes, right?

The entire pharmaceutical industry can be described as a rent seeker. The patents are a government granted monopoly that gives Big Pharma the leverage it needs to jack up the cost. Once a high floor is established, then it's time to advertise, network and get that drug out there so people can use it. One problem with this strategy: prescription drugs are now the 3rd leading cause of death after heart disease and cancer.

The patents on prescription drugs add at least $300 billion to the cost of health care, according to Dean Baker, an economist with the Center for Economic Policy Research. He notes with interest how one drug, Novartis, a drug that sells here for $70,000, sells in India for $3500. This is not the free market at work, my friends. This is how patents work and patents are turning our medical system into a sort of mafia. Perhaps now we can see why some countries have made health care free for every citizen. A single payer system can smack down the leverage patents can have on the market.

There is also considerable evidence that patents do nothing to increase innovation in the market. Michelle Boldrin and David Levine, have devoted an entire chapter of their book, Against Intellectual Monopoly, to this one subject alone. Their thorough research on the history of drug development with and without patents has shown us that in countries without patents, we actually see more drug discoveries in drug manufacturing than we do with patents. This same duo has made a strong case for the abolition of all patents in a report they published at the Federal Reserve.

There are better ways to finance drug research. We could pay for our research upfront rather than with patent royalty rewards. Baker notes, "Paying for research upfront rather than through government-granted patent monopolies would eliminate the incentive to lie about the safety and effectiveness of drugs. It would also allow for much faster progress since all results would be fuller public so that researchers could more easily build on each other’s findings."

Government funded research upfront could be open sourced, so that more people are involved in the process of drug discovery, we have more transparency and that would lead to safer drugs. That in turn could reduce our health costs as a nation and provide better outcomes. Not just for ourselves, but for the world. This is how we can oust the Big Pharma mafia.